Market Plus with Sue Martin

Paul Yeager Welcome into the Friday, October 6, 2023 installment of Market Plus. Back again, Sue Martin. Sue, I don't like cutting you off when certain things, but you know how we have that limited time. I'm not saying we have unlimited time. We have a chance to flush a couple of things out. I'm going to start with some questions because they were a lot of my follow ups and you're all brilliant out there who watched the show.

Paul Yeager So let's start with Dylan, who hit us up on Facebook with this very first question. And Dylan wants to know, Sue, the basis is decent on corn at $0.20 under. Should bushels with no home be delivered on a basis contract with hope hopes of upside in futures post-harvest. We're going to we're going to we'll put Dylan up for a second question in a minute.

Paul Yeager So let's talk about the basis right now.

Sue Martin Well, I think that when we are looking at the market with full carry and you're storing it, you're betting on the fact that you're going to get a basis improvement. And I would say probably there's a time where you will get some better improvement and it be like right after farmers are complete, it's kind of a traditional thing.

Sue Martin Farmers are complete and all of a sudden they start fearing they're going to lock everything up. And farmers have storage this year. And of course, depending on how good the crops are in various places, they can their storage will handle more acres of store of grain.

Paul Yeager So you're optimistic that there is storage out there and you're not in the camp of: “There's way more on the farm when we started this harvest than what people were really truthfully saying?”

Sue Martin Well, I think there is more on the farm, but also we've got less production than we had a year ago. So I anticipate, I think if we're going to drive a basis, you know, we've had two years where you couldn't do anything wrong and then this year, you know, it's a little bit different. It's going to be a little tougher almost.

Sue Martin I would call it more of an old fashioned market. And so I would have to say, I think that you're better marketing times probably going to come in April to May. And then we've had May lows here also for several years.

Paul Yeager Okay. So it sounds like you want to answer the second part of Dylan's question. Let's put Dylan back up here because he had two good questions. Dave wanted me to break them into two. So I'm doing what the boss says for once. More importantly, with the post harvest rally, eliminate will the will the post harvest rally eliminate the carry from December to March so I can roll the basis contracts out to March without worsening my basis?

Sue Martin I think we're going to hold these carries. So as you go to roll, you're going to be rolling up instead of rolling down.

Paul Yeager Okay.

Sue Martin And usually when you have the front stronger or inverted, then when you go to roll, you're rolling out a disadvantage. And I think we're looking at an old fashioned time where you can roll it and pick up a carry, as you know, and then look for your basis to maybe give you something extra.

Paul Yeager Okay. You wrote it this week, and I'm glad you said what you did about the last couple of years. We could do no wrong. Are we finally starting to return to the calendar where things make a little more sense on marketing planning?

Sue Martin I think so. I think we're going back to the old days, maybe a little bit. That's why we're at full carry of the markets are saying, carry this, there's plentiful supply. Demand's not as good. You've got South America to deal with. I think one thing that'll also entice our markets is the weather in Brazil. We all know what it's like in Argentina, it's Brazil and course they're dry and then seeing some above normal temperatures in the center to the north south is it's just the opposite is catching way too much rain.

Sue Martin So I think it's going to be will that crop production be as stellar as it's been or expected? And I have a funny feeling we may be. You know, you have an El Nino here, year here. And yet you're talking dryness and everything else is just kind of a fluke.

Paul Yeager Yeah. This whole El Nino thing, at least in the Midwest, has been so hit or miss and mostly miss. Yeah. And as I think you said this morning or last night, there's no recharge. We're going to go in dry unless we get a really wet October and November.

Sue Martin Very much.

Paul Yeager The long term forecast doesn't say that.

Sue Martin See, a year ago we had moisture at this time to help kind of replenish the Mississippi River.

Paul Yeager Yeah.

Sue Martin And that was a gift. This year we are so dry. October is expected to overall be a dry month. And it sounds like we could even be maybe into let's say you freeze the ground, dry ground freezes easier. Watch your pipes. But I would have to say you say you catch a lot of snow. How good is snow for giving you subsoil?

Sue Martin Not it's going to run off. And so we're going to go into spring next year. You know, we better hope for a wet April, you know, spring showers, because otherwise we're going to be sitting here very dry as we go in. And as Dr. Elwin Taylor would talk about the 89 year cycles, we're referring back to the 30’s.

Sue Martin And I would have to say, you know, they call the 30’s the dustbowl days. And I wonder what they're saying about climate change then.

Paul Yeager That another topic, another another podcast. So you can't get into that right now. Let's get into Wade's question. Let's find out how Sunshine Sue is on this one. Do you think there is potential for $6 or $7 December corn? Should I sell my soybeans off the combine or store them $6 or $7 corn Sue?

Sue Martin I could see us getting up into that? Remember, $6.28 was tough and then $6.41. So unless we get a tough start of next year, I don't see us doing it. I expect, you know, I go back to the soybean study that I talked about and in that every year, of course, we brought back, But out of 22 years, you made higher highs on the May beans over the October highs.

Sue Martin Now, I didn't get a chance to figure out all the percentages to give us an average of a percentage of what we would look like for an improvement and a regression. But I think that if that study proves true with beans again on the May contract, then I think it's going to bring our corn around. Do I think we're going to have a July high next year?

Sue Martin No, I don't think so. And so and I'm in the process of laying out my groundwork for next year. This past year, when I spoke for Elevator groups in January, my forecast to them was, you know, we're probably going to go down into spring. Be sure if you've got cash sales to make, make them now. Also, I look for a July high this year, could go into August and then we go down for a traditional fall low.

Sue Martin And that's kind of what we're doing. And interestingly enough, there were three years that I looked at when you had on November beans and we had a May low. I was looking at years going back, wanting to find the year that we had a May low like we have this year, 2019 was one, and we rallied into June and then fell into September and then lifted from there.

Sue Martin But we took out that June low and I so far we're holding the June low and I don't expect that low to hold. I think we're going to get some lift here, pull back like we're talking for on the May contract from the October high. Take a look at something underneath here. Will we check out $11.30? I don't think so.

Sue Martin I think we'll hold up.

Paul Yeager All right. Well, then let's go out of order for just real quick. Steven in Virginia had a question for you about beans, and I think it plays in a little bit. What you're saying here Will we even need to export soybeans this year on a shorter crop or should we become a large importer? Let's tie it to your last question.

Paul Yeager In this last answer In this question.

Sue Martin Well, I think what what is going to rule the roost on how badly we need to be importing is the building of all of these renewable diesel fuel plants that we've got coming online this fall, late fall, all the way through 2024. And that means we have to have beans. And, you know, the bean yields, I think overall were a little better.

Sue Martin But when you look at crop condition ratings and they're less through the port, a very poor 3% less than a year ago. And you look at the good to excellent and we're even under that compared to a year ago and you had a yield of 49.6, according to the September, you know, improvement that the USDA made. How can we expect a yield over 49.6?

Sue Martin I would think we're looking at a yield probably closer to 49. Maybe it's a 48.7. And that means that carry out, which is tighten. But again, you put some weather issues into South America and this grain market will go.

Paul Yeager And we'll take off. All right. I want to take one more question and this one is a follow up to our livestock discussion. Bradley in Nebraska The sell off in crude oil is strengthening recession fears, which should cattle feeders consider hedging. Fall 24 live cattle futures. You talked about the oil and the the live cattle together and here's a chance to wind those two in and out.

Sue Martin I would say an emphatic no. I think your best time to do that hedging will probably come in April, maybe May, maybe early June of next year. I'm looking for higher highs yet. I don't think we've even gotten close to them yet. You know, I think to first off, I don't think we're going into a recession. When you have job improvement or new jobs coming online more than the trade expects, unemployment remaining fairly low.

Sue Martin That's not recessionary. That's pretty darn good.

Paul Yeager Even with high interest rates.

Sue Martin Yes, exactly. And of course, I remember the day when 7% interest wasn't so bad. It was not so bad at all. Home loans, you know, a cheap, cheap one from the earlier before me, before school piece, You know, I would have been probably 4.5%, maybe 5.2% if you start getting it up into double digits.

Sue Martin Now we're starting to talk. So I think, yes, you'll see waves come and go ebb and flow in that market. I don't think we're going for a recession just yet. And probably the last thing the President Biden wants before he runs for office is a recession. He isn't going to want bad time for everybody. He wants it to look good.

Sue Martin And so I think we'll not see a recession.

Paul Yeager Sue Martin, thank you so much. Appreciate it.

Sue Martin Thank you.

Paul Yeager That'll do it for Marketplace. Next week, we are going to take a deep dive into the harvest numbers from USDA with a roundtable discussion. Elaine Kub, Don Roose, and Jeff French will be here to break it all down. Thank you for joining us. Have a great week.  

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